Carpenter Technology Corp

Geopolitical and trade · International conflicts and tensions

Our business may be impacted by external factors that we may not be able to control. War (such as the war in Iran, the war in Ukraine, the war between Israel and HAMAS, the war between Israel and Hezbollah and the Houthi attacks on commercial shipping vessels and other naval vessels), civil conflict, terrorism, other geopolitical and diplomatic tensions, natural disasters, climate change and public health issues could cause damage or disruption to domestic or international commerce.

Natural and catastrophic events · Climate change and environmental impact

Our manufacturing processes, and the manufacturing processes of many of our suppliers and customers, are energy intensive and generate carbon dioxide and other 'Greenhouse Gases,' and pending legislation or regulation of Greenhouse Gases, if enacted or adopted in an onerous form, could have a material adverse impact on our results of operations, financial condition and cash flows.

Economic and market conditions · Economic recession and downturns

The commercial aerospace and defense markets are historically cyclical due to both external and internal market factors. These factors include general economic conditions, airline profitability, consumer demand for air travel, varying fuel and labor costs, price competition and international and domestic political conditions such as military conflict and the threat of terrorism. A downturn in the commercial aerospace or defense industry would adversely affect the demand for our products.

Natural and catastrophic events · Pandemic and public health crises

Our business may be impacted by external factors that we may not be able to control. Public health issues including domestic or international pandemics, other outbreaks of contagious diseases and other adverse public health developments have caused or could cause damage or disruption to domestic or international commerce by creating economic or political uncertainties.

Geopolitical and trade · Trade policies tariffs and sanctions

Our international operations and global sales expose us to various risks including the impact of tariffs, which may adversely affect our business. Significant changes to United States and international trade policies continue to emerge and activity levels have increased with regard to new import and export tariffs, retaliatory tariffs, and quotas. These changes, including any implementation of or changes in trade sanctions, tariffs and embargoes, could materially adversely impact our business.

Project and contract management · Project execution and delivery risks

Over the last few years, we have undertaken capital projects associated with expanding our production capacity and capability, including our current brownfield expansion project in Athens, Alabama. Our success in expanding our operations in a cost-effective manner depends upon numerous factors including the ability of management to ensure the necessary resources are in place to properly execute these projects. If we are not able to achieve the anticipated results from our capital expansion projects, or if we incur unanticipated delays, or excess costs, our results of operations and financial position may be materially adversely affected.

Supply chain and procurement · Raw material availability and cost volatility

We rely on third parties to supply certain raw materials and supplies that are critical to the manufacture of our products and we may not be able to access alternative sources of these raw materials if the suppliers are unwilling or unable to meet our demand. In some cases, these critical raw materials and supplies are purchased from suppliers operating in countries that may be subject to unstable political and economic conditions.

Supply chain and procurement · Supplier operation and dependance

If suppliers increase the price of critical raw materials or are unwilling or unable to meet our demand, we may not have alternative sources of supply. The manufacture of some of our products is a complex process and requires long lead times. As a result, we may experience delays or shortages in the supply of raw materials.

Core operations · Quality control and product defects

We have a complex manufacturing process necessary to meet our customers' stringent product specifications. We are also required to adhere to various third party quality certifications and perform sufficient internal quality reviews to ensure compliance with established standards. If we fail to meet the customer specifications for their products, we may be subject to product quality costs and claims.

Human capital and workforce · Labor relations and union negotiations

A portion of our workforce is covered by collective bargaining agreements and union attempts to organize our other employees may cause work interruptions or stoppages. As of June 30, 2026, there were 450 production employees at our Latrobe business unit covered by a collective bargaining agreement which expires on July 31, 2027. There can be no assurance that we will succeed in concluding collective bargaining agreements with the unions to replace those that expire which could result in work interruptions and stoppages.

Core operations · Facility damage and equipment failure

Our manufacturing processes are complex and depend upon critical, high cost equipment for which there may be only limited or no production alternatives. It is possible that we could experience prolonged periods of reduced production due to unplanned equipment failures, and we could incur significant repair or replacement costs in the event of those failures.

Core operations · Operational disruption and business continuity

It is also possible that operations could be disrupted due to other unforeseen circumstances such as power outages, explosions, fires, floods, accidents and severe weather conditions. A significant portion of our manufacturing and production facilities are located in Reading and Latrobe, Pennsylvania and Athens, Alabama, which increases our exposure to significant disruption to our business as a result of unforeseeable developments in these geographic areas.

Market position and competition · Pricing pressure and margin compression

Periods of reduced demand and excess supply as well as the availability of substitute lower cost materials can adversely affect our ability to price and sell our products at the profitability levels we require to be successful. Additional worldwide capacity and reduced demand for our products could significantly impact future worldwide pricing which would adversely impact our results of operations and financial condition.

Strategic execution · Merger acquisition and divestiture risks

We consider acquisitions, joint ventures and other business combination opportunities, as well as possible business unit dispositions, as part of our overall business strategy, that involve uncertainties and potential risks that we cannot predict or anticipate fully. Acquisitions, joint ventures and other business combinations involve various inherent risks including difficulties in integrating the operations, technologies, products and personnel of the acquired companies, diversion of management's attention from existing operations, and difficulties in realizing projected efficiencies, synergies and cost savings.

Industry regulation · Safety and environmental regulations

The extensive environmental, health and safety regulatory regimes applicable to our manufacturing operations create potential exposure to significant liabilities. The nature of our manufacturing business subjects our operations to numerous and varied federal, state, local and international laws and regulations relating to pollution, protection of public health and the environment, natural resource damages and occupational safety and health.

Legal and litigation · Product liability and warranty claims

We produce ultra high strength, high temperature and corrosion-resistant alloys designed for our customers' demanding applications particularly in our Aerospace and Defense, Medical and Energy end-use markets. Failure of the materials that are included in our customers' applications could give rise to substantial product liability claims. If we fail to meet the customer specifications for their products, we may be subject to product quality costs and claims.

Legal and litigation · Litigation and legal proceedings

Our business subjects us to risks of litigation claims, as a routine matter, and this risk increases the potential for a loss that might not be covered by insurance. Litigation claims relate to the conduct of our currently and formerly owned businesses, including claims pertaining to product liability, commercial disputes, employment actions, employee benefits, compliance with domestic and international laws and regulations, personal injury, patent infringement and tax issues.

Industry regulation · Regulatory compliance and changes

Regulations related to conflict minerals could adversely impact our business. The SEC has promulgated final rules mandated by the Dodd-Frank Act regarding disclosure of the use of tin, tantalum, tungsten and gold, known as conflict minerals, in products manufactured by public companies. There are costs associated with complying with these disclosure requirements going forward, including costs to determine the origin of conflict minerals used in our products.

International and currency · Foreign exchange and currency exposure

Risks associated with international operations include without limitation: political and economic instability, including weak conditions in the world's economies; difficulty in collecting accounts receivable; unstable or unenforced export controls; changes in legal and regulatory requirements; exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on international sales when converted into U.S. dollars).

International and currency · International operations and emerging markets

Risks associated with international operations include without limitation: political and economic instability, including weak conditions in the world's economies; difficulty in collecting accounts receivable; unstable or unenforced export controls; changes in legal and regulatory requirements; policy changes affecting the markets for our products; changes in duties, quotas, tariffs and taxes.